Professional Documents
Culture Documents
Master Production
Scheduling (MPS)
Overview of Aggregate Planning
Aggregate planning begins with a forecast of aggregate demand for the intermediate range.
Managers must consider a number of plans, each of which must be examined in light of
feasibility and cost.
Aggregate plans are updated periodically, often monthly, to take into account updated forecast
and other changes.
Hieratical planning system
For Example
Atthe end of the aggregate production planning exercise, a
garments manufacturer may arrive at the following plan
Produce at the rate of 9000 meters of cloth everyday during the
months of January to march Increase it to 11000 meters during
April to august and change the production rate 10,000 meters
during September to December
Carry10% of monthly production as inventory during the first
nine months of production
Work on a one-shift basis throughout the year with 20%
overtime during July to October
Aggregate Planning Inputs
• Resources • Costs
• Workforce/production • Inventory carrying
rate
• Facilities and equipment • Back orders
• Demand forecast
• Hiring/firing
• Overtime
• Policies
• Subcontracting
• Inventory changes
• Overtime • subcontracting
• Inventory levels
• Back orders
Aggregate Planning Outputs
Total cost of a plan
Projected levels of:
Inventory
Output
Employment
Subcontracting
Backordering
Aggregate Planning Strategies
Proactive
• Involve demand options: Attempt to alter demand to
match capacity
Reactive
• Involve capacity options: attempt to alter capacity to
match demand
Mixed
• Some of each
Demand Options
Pricing
Promotion
Back orders
New demand
Demand Options
Pricing
Promotion
Back orders
New demand
Pricing
• Pricing differential are commonly used to shift demand from peak
periods to off-peak periods, for example:
• Some hotels offer lower rates for weekend stays
• Some airlines offer lower fares for night travel
• Movie theaters offer reduced rates for matinees
• Some restaurant offer early special menus to shift some of the
heavier dinner demand to an earlier time that traditionally has
less traffic.
• To the extent that pricing is effective, demand will be shifted so that
it correspond more closely to capacity.
• An important factor to consider is the degree of price elasticity of
demand; the more the elasticity, the more effective pricing will be in
influencing demand patterns.
Promotion
Advertising and any other forms of promotion, such as
displays and direct marketing, can sometimes be very
effective in shifting demand so that it conforms more
closely to capacity.
Timing of promotion and knowledge of response
rates and response patterns will be needed to achieve
the desired result.
There is a risk that promotion can worsen the
condition it was intended to improve, by bringing in
demand at the wrong time.
Back order
An organization can shift demand to other periods by
allowing back orders. That is , orders are taken in one
period and deliveries promised for a later period.
The success of this approach depends on how willing
the customers are to wait for delivery.
The cost associated with back orders can be difficult
to pin down since it would include lost sales, annoyed
or disappointed customers, and perhaps additional
paperwork.
New demand
• Manufacturing firms that experience
seasonal demand are sometimes
able to develop a demand for a
complementary product that makes
use of the same production process.
For example, the firms that produce
water ski in the summer, produce
snow ski in the winter.
Aggregate Plan to Master Schedule
For a short planning range 2-4 months:
Master schedule: The result of
disaggregating an aggregate plan;
shows quantity and timing of specific
end items for a scheduled horizon.
Rough-cut capacity planning:
Approximate balancing of capacity and
demand to test the feasibility of a
master schedule.
Master Production Scheduling
Master Production Schedule (MPS) - A detailed disaggregation of the
aggregate production plan, listing the exact end items to be produced by a
specific period.
• More detailed than APP & easier to plan under stable demand.
• Planning horizon is shorter than APP, but longer than the lead time to produce the
item.
• Note: For the service industry, the master production schedule may just be the
appointment log or book, where capacity (e.g., skilled labor or professional
service) is balanced with demand.
Master Production Scheduling
The MPS - the production quantity to meet demand from all sources & is used for
computing the requirements of all time-phased end items
System nervousness - small changes in the upper-level-production plan cause
major changes in the lower-level production plan
Firms use a time fence to deal with nervousness by separating the planning horizon into –
1. Firmed Segment (AKA demand time fence), from current period to several weeks into
future. Can only be altered by senior management
2. Tentative segment (AKA planning time fence), from end of firmed segment to several
weeks into the future
The Master Production Scheduling Problem
Capacity Company Product Economic
Consts. Policies Charact. Considerations
Fermentation Bottling
Filtering
(3 40-barrel (1 bottling
(1 filter tank)
ferm. tanks) station)
Fermentation Times:
Microbrewery Performance
Week 0 1 2 3 4 5 6 7 8 9 10
# Fermentors Req'd 0 0 0 0 0 0 0 0 0 0
Feasible Loading?
Min # Fermentors Req'd 2 2 2 2 2 2 2 2 2 2
Fermentor Utilization 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total Spoilage 0 0 0 0 0 0 0 0 0 0
Microbrewery Performance
Week 0 1 2 3 4 5 6 7 8 9 10
# Fermentors Req'd 0 0 0 0 0 1 1 0 0 0
Feasible Loading?
Min # Fermentors Req'd 2 2 2 2 2 2 2 2 2 2
Fermentor Utilization 0% 0% 0% 0% 0% 100% 100% 0% 0% 0%
Total Spoilage 0 0 0 0 0 0 0 0 0 0
Microbrewery Performance
Week 0 1 2 3 4 5 6 7 8 9 10
# Fermentors Req'd 0 1 1 1 0 1 2 1 1 0
Feasible Loading? NO
Min # Fermentors Req'd 2 2 2 2 2 2 2 2 2 2
Fermentor Utilization 0% 100% 100% 100% 0% 100% 200% 100% 100% 0%
Total Spoilage 0 0 0 0 0 0 0 0 0 0
Compute Future
Inventory Positions
Net
Requirements
Future inventories
Lot Sizing
Master
Forecast Scheduling Master production schedule